Complete Real Estate Glossary: Essential Terms & Definitions for Homebuyers and Investors

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Complete Real Estate Title Industry Glossary: Terms Every Property Buyer Should Know

A

ABSTRACT OF TITLE – A comprehensive summary containing the complete conveyance and transfer history from the original Grant Deed, including all recorded deeds, deeds of trust, mortgages, leases, and instruments affecting title to a specific property.

ABSTRACTING – The professional process of producing and compiling a property’s abstract document.

ABSTRACTOR – A qualified individual or company that produces abstracts of documents and retrieves recorded documents from county microfilm records.

ADVERSE POSSESSION – Unauthorized occupation of property belonging to another party without the owner’s consent. In many states, an occupier may legally gain title to the land after a specific period of “peaceful occupancy.”

ALL INCLUSIVE RATE – A title insurance rate that typically includes the costs of title research and/or loan underwriting and transaction closing expenses.

ALTA – American Land and Title Association, the national trade organization representing the U.S. title insurance industry, comprised of title companies that process closings and issue Owner’s Policies of Title Insurance.

AMORTIZATION – The structured repayment of debt over a predetermined period, typically through monthly payments on mortgage loans. Derived from Latin “amortizes” meaning “to bring to death,” amortization requires payments large enough to cover accrued interest and reduce principal balance.

APR – Annual Percentage Rate. The yearly interest percentage of a loan, representing the actual interest rate paid.

APPRAISAL – Professional estimation of property value based on factual analysis and recent comparable area sales. Also called “an opinion of value,” appraisals typically use either sales approach or cost approach methodologies.

ATTORNEY’S OPINION – A written statement from an attorney regarding a property’s title condition, potential clouds affecting transfer, and overall assessment of real estate title status.

B

BASIC RATE – A standard title insurance rate charged when the consumer doesn’t qualify for any reduced rates.

BROKER – A licensed agent who negotiates property sales or purchases for others in exchange for a commission or fee.

BROKERAGE – The commission or fee paid to a broker for professional services.

C

CERTIFICATE OF TITLE – A written opinion typically executed by an examining attorney in states where attorneys review title abstracts, stating how title is currently vested.

CHAIN OF TITLE – The complete historical record of property ownership beginning with the original conveyance (such as a government Grant deed) and including each succeeding transfer by will or deed, with each transfer representing a link in the chain.

CLAIM – An assertion of right to payment, surrender or delivery of property possession, or recognition of some legal right.

CLOSING – Also called “settlement,” this critical process finalizes a real estate transaction through completion of mortgages, deeds, leases, and required instruments, accounting between parties, disbursement of funds, recording of documents, and handling of insurance policies.

CLOSING STATEMENT – A formal balance sheet summary provided to buyers at closing showing all debit and credit amounts each party receives in the transaction.

CLOUD ON TITLE – Any potential claim, irregularity, or encumbrance that could adversely affect conveyance and impair clear title if validated.

COMMISSION – The fee paid to real estate brokers, mortgage brokers, or real estate professionals for services rendered.

CONDITIONS – Provisions written into deeds and real estate instruments that make certain rights contingent upon future events.

CONTRACT – A binding agreement between parties, usually formal and written.

COVENANT – A formal agreement between parties where one gives promises, conditions, and assurances to the other, such as warranty covenants.

D

DEED – A legally binding document transferring real estate title from one party to another.

DEED BOOK – The official county public record book where deeds are recorded.

DEFAULT – Failure to perform promised obligations or pay debts by the agreed due date.

DEFECT – A cloud, blemish, imperfection, or deficiency in a title that creates irregularities or faulty issues.

DEPRECIATION – Property value loss caused by wear and tear, destruction by elements, or functional/economic obsolescence.

E

EARNEST MONEY – The down payment or portion of purchase price made by a buyer as a “good faith” deposit.

EASEMENT – The legal right allowing a person to enjoy or make limited use of another’s property.

EGRESS – The conveyed right to a path allowing a party to exit from their property.

EJECTMENT – A legal eviction process or lawsuit to regain possession of real estate held by another party.

EMINENT DOMAIN – The governmental right to acquire privately owned property for public purposes through condemnation proceedings, usually with payment of reasonable value.

ENCROACHMENT – The extension of a structure from its proper property across a boundary line onto adjoining property.

ENCUMBRANCE – Any right, claim, or lien upon property title involuntarily held by someone other than the property owner.

ENDORSEMENT – A modification to a title insurance policy that changes, expands, or modifies coverage to meet specific requirements.

ESCROW – The process of depositing money and documents with an impartial third party (escrow agent) to be disbursed when all transaction conditions are met.

ESCROW AGREEMENT – A written agreement between buyer, seller, and escrow agent detailing the conditions for disbursement of deposited items.

ESTATE – (A) A large land parcel with significant improvements; (B) The entirety of one’s possessions, assets, debts, and liabilities; (C) The nature and extent of ownership rights to property.

EVICTION – The legal process of removing a party (usually a tenant) from a property.

EXAMINATION – The thorough study of instruments in a title chain to determine their effect and condition and assess title status.

EXAMINER – A qualified professional who examines and determines real estate title conditions.

F

FEE SIMPLE – The highest form of property ownership, giving the owner full disposition power and unqualified ownership rights.

FIRST MORTGAGE – A loan or mortgage with priority over any other mortgage or lien on the subject property.

FORECLOSURE – A legal proceeding to collect on real estate mortgages or liens, typically resulting in loss of redemption rights and sheriff’s sale of the property.

EXAMINATION FEE – The charge for researching public property records to ensure the buyer is acquiring property from the legal owner, free of liens, back taxes, and other claims. Often covered by the title insurance policy.

G

GENERAL WARRANTY – A comprehensive deed provision containing all common law warranty items, also known as “full warranty.”

GOOD FAITH ESTIMATE – A federally required (RESPA) lender estimation of closing costs provided to buyers within three days after mortgage application.

H

HAZARD INSURANCE – Property insurance protecting against specific hazards like fire, natural disasters, and vandalism, depending on policy type.

HEIR – A person entitled to inherit property by law or under will provisions.

I

INGRESS – The lawful right to access or enter property, such as a right-of-way across adjoining land.

INTESTATE – Dying without leaving a valid will.

J

JOINT TENANTS – Multiple persons holding property title with equal rights during their lives, with the provision that a deceased tenant’s share passes to surviving tenants until full title vests in the last survivor.

JUDGMENT – A court’s final determination awarding payment or relief to parties in a lawsuit.

L

LEASE – A binding agreement granting property use or occupancy for a specific period in exchange for rent.

LIEN – A property liability serving as debt repayment security, created by contract (mortgage) or by operation of law (HOA or mechanics lien).

LIS PENDENS – A public notice of pending litigation affecting property title.

LOAN POLICY – A title insurance policy issued to mortgage lenders, protecting against losses from defects such as liens or unmarketable title.

M

MARKETABLE TITLE – A title sufficiently free from material defects and liens that courts would force a questioning purchaser to accept it.

MARKET VALUE – The estimated property value based on the average between highest and lowest recent sales prices in a specific area.

MECHANIC’S LIEN – A property lien securing payment for labor, services, or materials provided for property construction or improvements.

METES AND BOUNDS – A land parcel description using directions, courses, distances, and monuments to define boundaries.

MORTGAGE – A temporary conditional property pledge serving as security for debt repayment.

O

OPINION – The professional conclusion regarding title status based on thorough title examination.

OWNER’S POLICY – A title insurance policy protecting property owners against losses from defects, encumbrances, liens, or unmarketable title.

OWNER CARRY CONTRACT – A seller financing arrangement where the seller carries the mortgage instead of receiving cash, often used when mortgage guidelines tighten or to make property more appealing to buyers.

P

POWER OF ATTORNEY – A legal instrument authorizing someone to act as another’s agent or attorney.

PREMIUM – The amount paid for an insurance policy or additional sum paid beyond regular price.

PROBATE – The legal process verifying a document’s validity, particularly wills.

PROMISSORY NOTE – A written promise to repay a specified sum by a certain date or on demand, typically including interest payment provisions.

PUBLIC RECORDS – Official records available to the public, including transcripts of all recorded instruments.

Q

QUIET TITLE SUIT – A lawsuit initiated by a property owner to eliminate immaterial or unenforceable claims that could cloud title.

QUIT CLAIM DEED – A deed transferring any possible interest or rights the grantor may have in the property without implying actual title ownership.

R

REALTOR – The copyrighted trade name exclusively used by National Association of Realtors members.

RECORD TITLE – The recorded aspects of title appearing in public records, distinguished from unrecorded interests.

REFINANCE RATE – A reduced rate on a Loan Policy for a refinance transaction where the existing loan was previously insured.

REISSUE RATE – A reduced rate for an Owner’s Title Policy on previously insured property.

RIGHT OF WAY – The right to pass over another’s property, usually via easement, or a strip of land for public facilities.

RIPARIAN RIGHTS – The rights of property owners to water bodies bordering their land.

RISK RATE – A title insurance rate excluding title research costs or escrow/closing expenses.

S

SEARCH – A thorough examination of public records to locate all documents relating to a particular title chain.

SECOND MORTGAGE – A junior mortgage ranking immediately below the first mortgage in priority.

SELLER FINANCING – When a property seller assists with transaction financing by carrying a loan (second or entire purchase) with the buyer making payments directly to the seller.

SETTLEMENT (CLOSING) – The date when property ownership officially transfers to the buyer through deed delivery.

SIMULTANEOUS ISSUE RATE – A reduced rate for title insurance policies issued simultaneously on the same property or loan.

SPECIAL WARRANTY DEED – A deed warranting title only regarding the seller’s acts and interests claimed through the seller.

SUBDIVISION – A land tract divided into blocks, lots, and building sites with designated streets, alleys, parks, and utility easements.

SURVEY – The measurement process determining property boundaries, area, and structures, or the resulting map showing these details.

T

TAX LIEN – A recorded lien attached to property securing payment of delinquent property taxes.

TENANCY BY ENTIRETIES – A property interest based on the legal fiction that spouses are one person, with full ownership passing to the survivor upon death.

TENANT – One who possesses property under lease or holds land by any title.

TENANTS IN COMMON – Multiple persons with title to a single property having common possession rights while holding separate interests, each able to sell or will their share independently.

THIRD PARTY – A party not principal to a contract but having some rights, interest, or duty affected by it.

TITLE – The combination of elements constituting the highest legal right to possess, own, use, control, and dispose of property, or the legally recognized rights of ownership.

TITLE COVENANTS – Protections inserted in conveyances to protect purchasers against title insufficiencies, including covenants against encumbrances, for further assurances, good right to convey, quiet enjoyment, seisin, and warranty.

TITLE DEFECT – Any adverse claim in the title chain or material irregularities in document execution affecting title.

TITLE EXAMINATION – The research process ensuring the buyer is purchasing from the legal owner and that no liens, back taxes, or claims affect the title.

TITLE INSURANCE – Protection against losses resulting from title defects, liens, and encumbrances.

TITLE PLANT – A centralized database of indexed title records expediting title examinations.

TITLE SEARCH – The examination of public records for instruments affecting property title.

TITLE SEARCHER – A professional specializing in researching property titles.

U

UNDERWRITER – An insurance or mortgage company professional who reviews applications and issues approvals or policies.

W

WAIVER – The voluntary relinquishment of a known right, claim, or privilege.

WARRANTY DEED – A deed guaranteeing the title being transferred is free from claims or clouds and containing one or more title covenants.